CFAH

San Francisco Listed Housing Inventory: 10/25/10 (www.SocketSite.com)
Inventory of listed single-family homes, condos, and TICs in San Francisco increased 2.5% over the past two weeks to a new half-decade high of 1,985 active listings. On average, inventory has fallen 3.0% during the same two weeks over the past four years.
Current listed inventory is up 42% on a year-over-year basis, up 23% versus the average of the past four years, and up 34% as compared to an average of 2006 and 2007. Once again, listed sales in September (342) were down 13% on a year-over-year basis.
The inventory of single-family homes for sale in San Francisco is up 55% on a year-over-year basis to 801 while listed condo inventory is up 28% to 1,184.
Almost 40% of all active listings in San Francisco have undergone at least one price reduction while the percentage of active listings that are either already bank owned (91) or seeking a short sale (177) remains at 14%, up 1% on an absolute basis over the past two weeks.
The standard SocketSite Listed Inventory footnote: Keep in mind that our listed inventory count does not include listings in any stage of contract (even those which are simply contingent) nor does it include listings for multi-family properties (unless the units are individually listed).
SocketSite’s Listed San Francisco Inventory Update: October 25, 2010 [SocketSite]
A New High For Listed San Francisco Housing Supply [SocketSite]

Comments from Plugged-In Readers

  1. Posted by badlydrawnbear

    Well, this isn’t good news for those hoping the worst was over.
    That said, I do think prices are finally falling to a place where we will finally see some ‘pent up demand’ driving sales and to staunch the bleed without government interference.

  2. Posted by badlydrawnbear

    sorry I should say, without more government interference than prior to the bubble.

  3. Posted by tipster

    More government intereference is pretty much a foregone conclusion. But prices are clearly about to take a pretty big fall anyway, and intereference merely postpones or slows the ultimate declines.

  4. Posted by unwarrantedinlaw

    You bears are on a roll and are starting to wear down a bull like me. Prices for sfr’s still haven’t come down more than 20% from bubble peak, though, and it sure seems a lot better than the dark days of March 2009. The thing to watch out for will be the currency. The value of gold hasn’t changed but the value of the dollar has. No government that has set out to devalue its currency has ever failed.
    In five years your house worth $1m in 2010 dollars might drop to 800k in 2010 dollars, but it could be worth $5m in 2015 dollars. The onslaught from dollar devaluation can overwhelm the most bearish scenario for house prices.

  5. Posted by eddy

    There have most certainly been -20% and greater decreases in value from peak. There have also been some small gains here and there. I do think the worst is over, but it’s not going to get better for a long time, maybe another half decade or 60% of a decade, at least.

  6. Posted by A.T.

    And sales continue to peter along slowly. October to date (through 10/24) currently shows 114 SFRs and 87 condos/TICs. So with a week to go we’re on pace for about 250 sales in October – -probably a bit more as tardy recordings drift in. About 8 months of inventory (calculated as sales/actives, a conservative measure). Not much pent up demand but a lot of supply, actual and pent up.
    I agree with badlydrawnbear that these big price declines will draw out some buyers, but I don’t think it will be a material number until prices are down quite a bit more and start to stabilize. People don’t want to buy when the widespread (and accurate) perception is that prices are falling, regardless of the absolute cost or affordability.

  7. Posted by lol

    A.T.
    Sorry, affordability is the key here. As long as owning costs you more than twice the cost of renting, there will be no real incentives to mainstream buyers.
    I am starting to see a few deals out there that resemble parity between rent and buy. But there are still many delusional sellers (and a few delusional buyers as well).

  8. Posted by eddy

    I’m not sure RvB is ever going to come into full alignment for the top 2 tiers in SF.

  9. Posted by ex SF-er

    although this data is interesting and also useful, I think we also have to be very careful with interpretation because there have been many unique interferences with this data set over the last few years- such as Fed purchases of Treasuries/MBS and the FTHB credit (although I know many feel that this had no effecton SF proper)
    overall if I had to make a broad statement I would say that in general seller sentiment in the SF market has changed somewhat.
    in the past (2007 and prior) if you didn’t get your sale at the price you wanted you pulled your home off the market and relisted after the Superbowl for a higher price. (since RE only goes up).
    now it is starting to sink in to many people that RE may continue falling. Thus you may not want to pull your home off the market so fast… and you may want to relist earlier.
    this is demonstrated by the slope of the inventory line each year. It is much steeper in Jan-April of 2008/9/10 compared to 2006/7… and then the plateau is earlier… and then the drop off in inventory in Oct/Nov/Dec is slower in 2008/10 compared to 2006/7. (I maintain that late 2009 was affected by FTHB credit although clearly I have no proof… and this partially helps explain why its curve is so different than the other 4).
    not conclusive, but I hypothesize that the slopes of the curves will remain like this for some time until sellers are more confident that they can pull their homes off the market and relist for a higher price later.
    the only way to prove this would be to get all the data and find out when the people are first listing and when they are first withdrawing their data, and see if this has changed since 2005. I don’t have that sort of access (or time!)
    regardless, it’s all about income and jobs.
    hard to have a sustainable rebound in RE when you are in the midst of a jobless (or job-loss) “recovery”.

  10. Posted by sfrenegade

    “the FTHB credit (although I know many feel that this had no effecton SF proper)”
    The trailing 3 months inventory data I gave earlier suggested that housing tax credits affected the City and County of SF.
    I also gave some description of the slope of months of inventory in a prior thread too.

  11. Posted by unwarrantedinlaw

    From an article on cnbc entitled: Dollar at risk of becoming toxic waste: “The dollar is being trashed, we’ve actually had effectively devaluation of about 14 percent in the last two months,” Griffiths said.
    Price drops for sfr’s in San Francisco won’t persist because we’re moving the goalposts. They didn’t drop that much anyway, and we’re apparantly at 22% unemployment plus underemployment right now in Calif, the worst since the Depression. It’s likely that things will get better – they always have.

  12. Posted by ex SF-er

    It’s likely that things will get better – they always have.
    although I agree with this point (things will get better)I have two comments
    1) the issue isn’t necessarily if it will get better, it is when. the when could be many years or even decades off.
    2) although I agree with your sentiment, your statement is a logical fallacy.
    a common example used is Nassim Taleb’s turkey. Every day the turkey is fed by the gentle farmer, day after day he is fed. Any reasonable turkey would then infer after hundreds of data points that the farmer is benevolent and will feed him forever.
    then one day the farmer chops off the turkey’s head. there is nothing in the backward looking data that would indicate this to the turkey.
    this was seen recently (back in 2006-2007) when people said “Real estate has never fallen on a national level in the modern era”. And then it did.
    there is a possibility that RE will not reach the levels seen in the mid 2000’s again in real terms for over a generation. (sort of like how Japanese RE is still lower now than it was 20 years ago, or the Nasdaq is lower now than it was 11 years ago etc).
    buying now is incredibly risky. this is not to say it is dumb. it is simply risky. many fortunes have been made and lost doing risky things. If you bought Pets.com when it was crashing you’d be wiped out. if you bought apple when its stock plummeted you’d be sitting pretty. both were risky trades.

  13. Posted by lol

    Love the turkey story…
    About whether it’s risky to buy today. It is less risky than 2 years ago.
    As long as you are buying a good deal today, you should be safe-ish. I stay the heck away from places that ask less than a 25% discount from 2007-2008. I don’t want to bail out a bubble-topper. My (future) taxes already did that.

  14. Posted by djt

    I bought in a desirable area outside SF about 9 months ago and it was terrifying for many of the reasons pointed out here repeatedly. But I had to look at our own situation ultimately. With 3 small children bursting out of a small rental house that was disintegrating (under rent control for 15+ years thus the owner had no money to maintain it), we were ready for more space. We also wanted additional space of a a particular function. We ended up spending about 25% more net per month then renting. We bought for less than 2 years ago. But I don’t expect anything beyond the place being worth what we paid 10 years from now. But it was still terrifying!

  15. Posted by sfsf

    djt, personally, I’m not positive on SF real estate, but your post makes perfect sense to me. People are getting back to buying homes as places to live as dumb as that sounds. They aren’t using crazy leverage thinking they’ll double their money in a few years. If you know you need the place and will enjoy it every day for the next ten years, then you just try to get the best value in this current market.
    unwarrantedinlaw, I’m a dollar bear with $/Euro through 1.40. This devaluation is intentional, and one of the things that the Fed’s QEII is doing is intentionally weakening the USd. This weekend’s G-20 summit didn’t produce much but I think one of the issues is that other countries also hope to devalue their currencies and the G-20 wants to avoid a race to the bottom. All of that said, for a $1mm house in 2010 dollars to be worth $5mm in 2015, the devaluation would have to be so ridiculously severe, that things would have to be pretty bad. At that point, I might want to own gold, and then after that canned food, arable/defensible lend, and some weaponry instead . . . (I’m negative on the USd as well, but that “$5mm in 2010 dollars” example stretches it to make a point.)

  16. Posted by joh

    As has been mentioned many times before, the “listed” inventory is just that. In prior years, there were hundreds of unlisted properties in the new condo complexes and high rises that aren’t reflected in the graph above.

  17. Posted by J

    Just look at the Ads on this very page and you’ll see that there is still plenty of “unlisted” “new” inventory.

  18. Posted by EBGuy

    Pent up supply continues to hold steady (out with the old, in with the new). Currently, 1467 homes are in some state of foreclosure (NODs, NOTS, bank owned) in Ess Eff. This is compared to 1425 homes two weeks ago. Standard disclosures about noise in the data; information deemed reliable but not guaranteed.

  19. Posted by A.T.

    I’m guessing we peaked for the year, but we may still get a new high. New MLS listings (per redfin) were under 100 today, the first Friday that has happened in a long time. But new SFR/condo listings this week (175) have still far outpaced sales (58). So it all depends on the volume of withdrawns — i.e. pent-up supply.

  20. Posted by tipster

    SF $/sft is now lower than March of 2009, the supposed “bottom”. Lousy metric, but one indicator. It’s also falling, as opposed to rising, which it did last year at this time.
    http://www.redfin.com/city/17151/CA/San-Francisco
    No wonder, because new listings continue to outpace sales by a wide margin. 105 new listings and only 48 sales this week, according to redfin, of SFRs, condos and townhouses. 124 price reductions, all competing for the same few buyers. The only reason inventory has peaked is dejected sellers taking their properties off the market, only to have to make thousands of dollars of financially draining payments and tax payments on a property they already decided they don’t want.
    Should be quite a bloodbath in the spring, when the sellers, their resolve softened by thousands of dollars of payments, taxes, maintenance, insurance, all down the toilet, finally give up and sell for whatever the market will bear.
    And with long term interest rates now RISING as a result of QE2, the few buyers there are will, sadly, qualify for less money than they did last week, forcing prices down faster than ever. Just this past week, buyers now qualify for 4% less than they did at the start of the week (According to bankrate.com, current rates: 4.38, last week 4.21, difference of .17, .17/4.21=0.04). That works in the buyers favor, because there are so few buyers relative to the number of sellers that prices have to fall to meet their ability to pay. So when they qualify for less, prices fall even faster, so there is no need to rush.
    So buyers will get more home for less money, and with the lower price, it will be easier for them to sell in several years, without taking as big of a loss as they would have taken otherwise, for example, allowing them to sell merely by forfeiting their entire downpayment, without having to crush their credit as well in a foreclosure or short sale.
    “Bloodbath” might be too generous a word for the frustrated crop of current hopeful sellers. Buyers who wait are going to make out, but sellers would be wise to bail now. They lost 4% in one week alone. A price drop of 4% just keeps them even for the week, not relative to the shrinking buyer pool, but to the few remaining buyers’ ability to pay. And if China actually raises interest rates? It’s lights out for SF real estate. Buyers will qualify for 20% less overnight!

  21. Posted by [anon.ed]

    “And with long term interest rates now RISING as a result of QE2,”
    This week marked the lowest ever dude. From, um, today:
    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/11/12/MNMD1GBE2M.DTL
    Wow are you ever a character.

  22. Posted by anonee

    so tell us tippy,
    do you believe interest rates are going up? when?
    i knew you were not in the deflation camp.

  23. Posted by Brahma (incensed renter)

    From the Los Angeles Times on the 17th, Mortgage applications are down and rates are up:

    Mortgage rates were up, as a sell-off in the bond market pushed up longer-term interest rates across the board. The average rate for a 30-year fixed-rate mortgage jumped to 4.46% from 4.28%, with points increasing to 1.13 from 1.04 for loans that would cover 80% of the value of a home.

    …and what does the article say is among the causes of this jump in interest rates?

    …the bankers assocation’s vice president of research and economics, said the increase in rates was due to…rising concern over the Federal Reserve’s “quantitative easing” program, under which the Fed plans to buy $600 billion worth of Treasury bonds by mid-2011.

    ‘course very little in the financial press is backed up by hard data, so take with the usual shaker full of salt.

  24. Posted by tipster

    “Wow are you ever a character.”
    Thanks. Coming from you, that means I’m a normal person.
    BTW, rates are up again: average rate is now 4.53, according to bankrate. Were 4.21, a difference of 0.32. 0.32/4.21 is 7.6%. That’s what the value of every home just dropped by in less that two weeks, just from the interest rate swing. Now add in the deflating bubble and, well, you can see the problem. Probably 10% in only two weeks. Should be quite fun this winter when the frustrated sellers from this year return en masse and just throw in the towel.
    But tell me, as a real estate professional, were you really that much out of touch that you hadn’t realized rates were rising, and actually quoted the Chronicle for your information. Not to worry, we don’t really expect you guys to know such things, other than what you read in cheerleading papers.
    Feel free to make a fool of yourself any time you want to, though. It’s always a pleasure to read your responses.

  25. Posted by R

    I’m confused here. Does Tipster actually believe SFRE went down 10% in the last two weeks? Or is he really 17 years old living in his parents basement pulling all our legs?
    I mean, his theories have become more and more unhinged…. It’s kind of hard to tell.

  26. Posted by anonee

    @ editor,
    so tipster can make comments like this with abandon yet you censor me for asking him about it?
    what-ev-er…that’s quality punditry ss style.

  27. Posted by tipster

    I believe, mo wait, I KNOW rates are rising, people can qualify for 7.6% less, there is far more supply than demand, unemployment remains high, so yes I believe values are dropping significantly, just like they rose quickly in the mid 2000s. I’m sure you noticed how quikly they rose. Funny how you guys are missing how quickly they are falling. Maybe you can compare your price prediction accuracy with mine and let us all know how good you are.
    As for anonnee, you might try actually supporting your statements and providing actual content and seeing how that goes. Yes, I was harsher than I usually am, but I respect him, and so I hold him to a higher standard, and I called him on it.

  28. Posted by A.T.

    10-yr bond rates have ticked up and mortgage rates have followed. These rates have been volatile, so I think it’s too early to call it a trend yet. But I’d bet that the 3.5% 30-yr fixed rates someone here was predicting not long ago will not come to pass.
    On this point, I was watching the Channel 7 news this morning while I was stretching for a run. There was a story about falling local home prices, citing the dataquick reports. They interviewed some realtor, and he recognized that loan rates are going up but claimed that meant it is a good time to buy now. Home prices would be rising as a result of higher loan rates because “that means there will be inflation.” No challenge from from the interviewer on having the logic backwards; nothing but a silently nodding head. Astounding.

  29. Posted by [anon.ed]

    If QE2 didn’t occur, rates would have gone up too. You probably actually realize that. That’s all I have to say to you about this, because I don’t have a Marina flat for sale for two bits and that’s the only thing that would make you be true or real in this forum.

  30. Posted by sparky-b

    A.T. I saw that report on the new last night, it makes me question whether you really went running this morning or not.
    Look you can lie to us, you can lie to your friends, you can lie to your personal trainer, but you can’t lie to yourself.
    Get out there and get that 5 miles in. You’re not a teenager anymore.

  31. Posted by anonee

    “you might try actually supporting your statements and providing actual content and seeing how that goes”
    where are my 40-50% d7 listings? where is my arm reset tsunami?

  32. Posted by A.T.

    10 miles — and I have the sore leg muscles to prove it!

  33. Posted by sparky-b

    anonee,
    We are in the middle of the 2.8% reset tsunami right now.

  34. Posted by tipster

    After the elections, interest rates will start to rise. That’s when home prices will get clobbered. That’s only three months away.
    Posted by: tipster at August 13, 2010 9:10 AM
    Wow, how does he do it?

  35. Posted by hangemhi

    2 years later, “how does he do it” is just soooooo funny. The sound of one hand clapping, since tipster’s other hand is still patting himself on the back for the other 100 statements he also got wrong. rates are now 25% lower than when tipster promised they were going up. AT’s comment about someone else preducting 3.5%, well, we’re at 3.4% now. At this point I won’t be shocked to see us get to 3%. Where ever they go from here – there will be no sudden spike anytime soon just like there hasn’t been a sudden spike or drop in decades.
    btw – i’m here on this 2 yr old post to get a look at inventory. We’re at less than 800 total SFR and units right now – or about 1/2 of the above chart’s avg for this time of year. good luck with your crystal balls everyone – since no one predicted this, i doubt you’ll predict the next 12 to 24 months either

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